I have never seen a situation remotely like this. No doubt this is due in part to the (thankfully) rare incidence of this sort of sociopath in the population, but also because in no dojo where I have trained would this behavior have been tolerated. Not one bit of it. You cross the line, if you're a newbie you have it explained to you where the line is. You get corrected. You're expected to stay corrected on your own. That's it. That's how it's supposed to work.

As for how it's working (or not working) in your dojo...no wonder your juniors are confused.

The guy's incorrigible. What does your sensei hope to accomplish with him? He's not going to get with the program; it's past time for him to leave.